Dumb Money

Friday, November 11, 2011

Hey, everyone...if you are still checking my blog, thank you so much. I know I've been slacking and been lazy. I'm going to try and be a better poster from now on even if I don't post everyday, I will try and post at least 3 times a week from now on.

Today was quite a good day in the market's actually the past two days were quite good as we gained back almost everything we lost from Wednesday's huge selloff. I actually thought after Wednesday we would continue downward back into the old trading range because the selloff was so powerful with 99 stocks dropping for every 1 that gained. The bulls still have some fight in them as they wrestled back control of the market the past two days.

As of now, we are still in a trading range market albeit a higher range than we were earlier. On the SNP we got 1220 as the low end of the range and 1290 on the high end.

On the chart you can see our old trading range between 1120 and 1225 and our new one between 1225 and 1280 which we have been in for a couple of weeks now. The bulls are buying in the 1220-1230 area and the bears are selling up around 1270-1290. I don't see any catalyst to push us past 1280 right now although economic data is coming in good. As long as Europe is dysfunctional we will stay in the range.

My only position right now which I told you about last time I posted is in gold via IAU. This trade is working out very well for me as I have a 10% gain so far which puts my trading account in positive territory for the year. Gold has caught a bid on persistent eurozone worries and after it's nice technical bounce off the 150 day moving average which has been long term bull market support.

Gold is in a nice rising channel right now and if you were so inclined you could buy at the bottom of the channel and sell at the top. I'm not that nimble so I'll pass on that trade.

I have not been doing much trading recently as the market has been too headline driven for me to play. I am not nimble enough to trade the 60 point range so I'll just watch from the sidelines with my gold. If you put a gun to my head and said pick a direction for the SNP I'd say we are headed down and now would be a good time to lay out a short position. But with positive seasonality, the bulls are going to be looking to prop this market into year end so it is tough to short now.

I'll be checking all your blogs in the next few days. Sorry for disappearing.

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Monday, October 24, 2011

Sorry peeps for not posting anything this weekend. My internet has been going up and down and up and down all weekend long. It is really starting to piss me off. Also, I've basically been in a coma the past two days after taking this drug called Seroquel. Man that stuff really puts my lights out. Has any of you taken Seroquel before? Is sleeping for two days in a row normal? I slept till 1 in the afternoon today and I still feel groggy as hell. Anyways, I'll be back up and running today and the rest of the week of course and I'll be checking all your blogs!

Today was a great day in the markets as Caterpillar blew away earnings forecasts, easing fears of a global growth slowdown. Caterpillar builds backhoes, mining equipment basically all the things needed for construction and mining so it is a good proxy for global growth. When CAT is doing well, the global economy can't be that bad.

CAT had record revenues and a 44% rise in quarterly profit easily beating analysts expectations. Caterpillar's stock jumped 5.6% on the news to over 90 dollars a share after being near 70 just 2 weeks ago.

It looks like the breakout from last week is continuing and it is okay to buy stocks here. The DJIA finished 105 points higer and the SNP and NASDAQ rose even more gaining 1.3% and 2.35% respectively. Oil jumped nearly 5% and gold was higher by 1%.

I think this rally is going to continue until 1270 or 1280 on the SNP as we have some serious upside momentum building and this is the seasonal best period to own stocks. Let's see what happens.

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Friday, October 21, 2011

Sorry, friends about the late post today. My internet was down this morning so I could not post as per my usual. I am really getting pissed off at my poor internet service. It's has been down at least 6 hours each of the past 4 days. I call tech support and of course they have no idea what's going on. My line is a good distance away from the main office so that is why it's always going up and down. I'm going to call them and ask for a free upgrade and if they don't give it to me, I'm going to get a new ISP. Anyways, on to the markets...

Today was a very good and powerful day for the indexes. I'm calling the breakout on the SNP 500. This should lead to more follow through buying next week.

As you can see on the above chart, SPY finally popped above that little red line which had been like a brick wall for over 2 months now. It is okay to buy stocks here and I will probably do some on Monday.

Thursday, October 20, 2011

I don't know if you all have heard yet but Moammar Qadaffi has been captured and killed. The Misrata Military Council led an attack on Qadaffi's hometown of Sirte where the ex-dictator was hiding. Not all the details are out yet but it seems Qadaffi was shot in the head and the legs whilst trying to escape rebel fighters in Sirte. More details to come later on.

Libya is the largest oil producing country in Africa and oil prices dropped on this news.

In other news, markets are quiet today trading in a 70 point range in the early going. There has not been much news to catalyze the markets today although new claims for unemployment benefits dropped to 403,000 which was slightly higher than economists had forecast. More importantly the four week moving average of new claims for unemployment benefits dropped to 403,000. This shows that even though the economy seems troubled, employers are not laying off people like crazy.

Wednesday, October 19, 2011

Wall Street's golden child AAPL missed earnings for the first time in four years yesterday! Profits were 7.05/share which came in below analysts expectations of 7.39/share. The stock is down 4% in early trading after being down as much as 8% in after hours trading yesterday.

Now AAPL is notorious for low balling guidance so analysts are always trying to figure out how much more they have to up their targets from AAPL's guidance. Last quarter AAPL predicted they would make 6.40/share. Analysts had raised their targets all the way up to 7.39 before earnings.

AAPL disappointed on iPhone sales selling 17.1 million iPhones while analysts were expecting 18-20 million. Sales were especially disappointing in September as consumers awaited the new iPhone 4S.

iPad sales were 11.1 million which was disappointing to analysts as well. iTunes had revenue of 1.5 billion in the quarter. The company sold 4.89 million Macs in the quarter. Revenue from the AAPL stores was 3.6 billion. iPhone 4S sales were 4 million in their first three days!

Wall Street was disappointed in the past quarter but I don't think it's anything to get scared about. After all that was LAST quarter's results...what is more important was their guidance which they raised to 9.30/share for this upcoming quarter. To me, the stock was unfairly beaten up. AAPL is not one of those high flying momo stocks with a 50 PE. AAPL is still growing, raised it's guidance and isn't that expensive to boot. This pullback is a good buying opportunity.

Tuesday, October 18, 2011

Bank stocks are up today after Bank of America posted better than expected earnings. Bank of America stock was up almost 7% today in early trading. The big positive surprise was Bank of America's revenue, which was 28.7 billion, increasing even in a tough quarter for most banks.

Profit per share was .56 which was helped by a 9.8 billion gain for selling it's stake in China Construction bank. Bank of America's core business appears to be shrinking however as it's net interest margin dropped to 2.32%. Net interest margin is the difference between what it pays depositors for use of it's cash versus what it charges for loans. Net interest income which is the bread and butter for banks shrank to 10.7 billion from 12.7 billion a year ago. Bank of America stock has fallen more than 50% this year.

In other earnings news, IBM's shares were down 4.5% in the early going after posting in line results. Investor expectations were high for IBM after it rallied to a record high close a few days ago. Analyst's were disappointed with the earnings which showed that IBM may have slower growth in the future. IBM posted revenue of 26.2 billion for the quarter and profits of 3.28 a share. IBM stock has risen more than 20% this year.

The overall markets are higher today as of 8 AM PST after earlier being down almost 1%. After the bell we get AAPL earnings which I will be watching closely.

Monday, October 17, 2011

We have had one hell of a rally in the US where prices have risen 14.1% on the SNP 500 since bottoming October 4th. We had been rangebound on the SNP 500 for the past two months but it now looks like we are going to break out of the range and head upwards. It has been a truly remarkable rally.

US stock futures are up and Asian and European market's are as well on a continuation of positive momentum from the past two weeks. US Dow stock futures are up 81 points as of 1:15 AM PST.

The Hong Kong Hang Seng index has also had quite a rally. It is now 18,800 after rallying nearly 3000 points in the past week and a half. That is a years worth of gains in less than two weeks!

European bourses are up as well across the board with the FTSE, DAX and CAC all up over 1%. It looks like we will get more rallying tomorrow. I plan on buying some AAPL when I wake up.